Pros and cons of buying property in a trust
Have you ever wanted to buy a property and find that it’s already in someone else’s trust? Cases such as these are quite common and easy to run into. While it’s common, it does not mean that you cannot buy properties that already belong to a trust.
How do you buy a property that’s already in a trust?
If there are no issues surrounding the specifics of the property and trust, then you can discuss with the property owner. From there, you can talk about wanting to buy his/her property, pay for it, and have the property ownership pass over to you. As soon as it is done, you can list this newly-bought property in your will and trust under your name. It can be as simple and straightforward as that.
However, there are certain times where the appointed trustee may not agree to sell the particular property. Perhaps the property has sentimental values that mean a lot to the original owner. Or perhaps it’s too profitable of a property to be sold off to anyone else. The reasons can vary.
We should also put it out here that if the trustee does not approve of letting go of the property, then you really cannot have the property. It doesn’t matter if you offer a lot of money for it or a really good deal. As long as the trustee of the original owner’s will says no, then it’s a no. Since, you know, if you sign off any assets or properties on your will, you’ll need the approval (read: signature) of the trustee.
Advantages and Disadvantages of Buying a Property That is Already in a Trust
Having said all of that, we have put together a summarized list of pros and cons of buying a property that’s already in a trust.
|If you are selling a property, once it is out of your trust, this very same property will not be liable for any estate duty when you have passed away.||If you are the owner of the property, you may most likely be unable to have any final say or control over the property that you wanted to sell. The trustee will have the final say as the trustee’s signature, in most ways, means more than the owner’s.|
|The executor’s fees for this sold off property will be removed. It will not be transferred to your heirs when you have passed away. That means you (and your heirs) will not need to worry about transfer duty and surrounding taxes.||Your control over the assets may be limited depending on what kind of trust this property is placed under (Vesting trust? Discretionary trust?).|
|If your trust is made to not prejudice creditors in mind, then the property will be protected from creditors.||You may have to pay for additional costs to set up, operate, and maintain the trust. Tax thresholds may increase as there are different kinds of taxes pertaining to and surrounding the property.|
|If you are buying a property in a trust, then the heirs of the original property owner cannot pursue you when the property is finally sold off to your hands. The property will legally be yours.||If you wish to transfer the property from a trust to your personal name, then a stamp duty will be applicable in this regards.|
After having said all of that, hopefully, you can understand what are the pros and cons of buying a property in a trust. If you still don’t understand, need more information, and require more advice, feel free to contact us for the necessary information.